- By Sangara Narayanan
After raising a lot of expectations about its future with strong performance during the first quarter, Twitter managed to disappoint every one with its second quarter numbers as the company reported flat user base growth.
During the second quarter, when Facebook managed to add 70 million users worldwide and two million users in North America alone, Twitter reported 328 million monthly active users by the end of second quarter, the same number they had at the end of first quarter.
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Warning! GuruFocus has detected 3 Warning Signs with TWTR. Click here to check it out.
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The intrinsic value of TWTR
It was a huge disappointment because Twitter managed to increase its monthly active user base by 9 million users during the fourth quarter of 2016, their best quarterly performance in many years.
Many including the author believed that, finally, Twitter's efforts have started to pay off and the company might see some traction over the next few quarters. But unfortunately, that first quarter growth spike might end up being an anomaly unless Twitter gets the number back up again during the third quarter of the current fiscal.
Twitter beat Wall Street expectations on the top line as well as the bottomline. But the estimate-beating results became a side note as lack of user base growth took all the media spotlight. The company reported earnings per share of $0.12 against the expected $0.05, while revenue came in at $574 million against the expected $536.7 million. But Twitter fell short of analyst expectation for monthly active users by one million.
"While we still have a lot of work to do for revenue growth to get it to track audience growth, the improvements in revenue growth reflect the progress executing against our top revenue-generating products in the second quarter as well as strengthening business fundamentals," the company's chief operating officer, Anthony Noto, said on a call with investors.
Twitter's stock has remained under intense pressure as it continues to trade in a narrow range of $15 to $20 since early 2016. Their not-so-great performance during the second quarter will likely take its toll on the stock price. Expect it to remain range bound or move lower till the next quarter numbers are released.
Disclosure: I have no positions in the stock mentioned above and no intention to initiate a position in the next 72 hours.
This article first appeared on GuruFocus.
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Warning! GuruFocus has detected 3 Warning Signs with TWTR. Click here to check it out.
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The intrinsic value of TWTR